Dmitry Kratov, the only official charged with the death of Russian whistle-blowing lawyer Sergei Magnitsky, sits in a court in Moscow last Friday. Dr. Kratov walked free later that day after the court acquitted him of negligence in a case that has become a rallying point for human rights advocates and sparked escalating legislation in the US and Russia.

At the center of the stormiest US-Russia diplomatic crisis since the cold war stands the enigmatic figure of Sergei Magnitsky, for whom the US Senate has named a punitive new law that imposes harsh visa and economic sanctions against scores of Russian officials who are deemed to have committed serious human rights violations.

The tale of Mr. Magnitsky, a corporate lawyer who blew the whistle on a vast corruption scheme, was arrested by the same officials he had implicated, and was allegedly beaten to death in prison over three years ago, appears to validate all the worst suspicions held in the West about the nature of Vladimir Putin's Russia. The Magnitsky Act, signed into law by President Barack Obama last month, is a controversial new breed of legislation that aims to compensate for the perceived failures of Russia's justice system by meting out punishment to about 60 Russian officials deemed to have been involved in the wrongful prosecution and alleged murder of Magnitsky.

The Kremlin's incandescent response makes it likely that the mutual acrimony will expand in weeks to come. Mr. Putin called the Magnitsky Act a "purely political, unfriendly act" that demanded a stern riposte. Last week he signed the retaliatory Dima Yakovlev Act, whose key provision is a ban on all adoptions of Russian children by US citizens.

But in an apparent effort to overturn the widely-held Western narrative, which sees Magnitsky as the victim of corrupt officials and a lawless state, Russian prosecutors have announced they will put the deceased Magnitsky on trial later this month, seeking to prove that he and his former boss, Bill Browder, head of the London-based Hermitage Capital, were the real criminals.

The pending trial has been fiercely opposed by Magnitsky's mother – who will be required to stand in for her dead son – and lawyers, who argue that a posthumous trial is against Russian law in all cases except when a family asks the court to "rehabilitate" a victim of an unjust verdict (a common legacy of the Stalin era).

"We did not ask for this, and we do not think the deputy prosecutor had any right to revive Sergei's case after it was closed upon his death," says Natalia Magnitskaya, Magnitsky's mother.

"We seriously doubt that the very same people who prosecuted Sergei hold out any prospect of rehabilitating him. So, our family doesn't want to take any part in these illegal actions," she adds.

Last week a Russian court acquitted Dmitry Kratov, a prison doctor who is the only official ever to have been charged in connection with Magnitsky's death. Mr. Kratov had been accused of failing to render timely medical assistance on the night Magnitsky died in handcuffs on the floor of a Moscow prison cell. A post-mortem report issued by the Russian Ministry of Health indicated that "the injuries on Magnitsky's body were most likely caused by multiple injuring impacts of a blunt object that might possibly be a rubber baton."

"This case was never properly investigated by authorities," says Lyubov Volkova, a member of the Public Oversight Commission, an independent watchdog mandated by Russian law to report on prison conditions. It was the first non-governmental group to look into the circumstances of Magnitsky's death.

"In Kratov's court case, both the judge and prosecutors acted as though they were his lawyers.... It seems that Kratov was just a scapegoat from the very beginning. That's not surprising, since deputy prosecutor Viktor Grin's name is on the US Magnitsky List, so obviously he wants to do everything possible to protect himself and make Magnitsky look guilty."

According to that version, Hermitage's attorney Magnitsky went twice in 2008 to the Kremlin's State Investigative Committee to testify that corrupt police and tax officials had embezzled $230 million paid in taxes by Hermitage Fund companies, using corporate seals and charters seized in an earlier police raid on Hermitage's Moscow headquarters.

"My offices and our law firm's offices were raided by about 25 officers of Russia's Interior Ministry, who took all our official company documents," says Browder – once the biggest foreign investor in Russia – who had been barred from re-entering Russia about 18 months earlier on "national security" grounds.

"Those documents were then used in a complicated scheme to steal $230 million we had paid in taxes the previous year to the Russian government," he says. When Browder complained, he was charged by the same officers, in absentia, with underpaying his taxes in 2001.

After Magnitsky testified, Browder says, the same officers arrested him and placed him in the Butyrka prison, where he died a year later.

The investigations bankrolled by Browder have found that many of the police officers and other officials implicated by he and Magnitsky have since become inexplicably wealthy, and some have purchased expensive foreign properties. Aside from the doctor, Kratov, no Russian investigations have been opened into any of the 60 or so officials Browder alleges to have been involved in the corruption scam and the subsequent prosecution and untimely death of Magnitsky.

The Russian government's case, which will feature at Magnitsky's upcoming posthumous trial, appears to be summarized in a document handed out to US senators last summer by visiting Russian parliamentarians. It alleges that Browder, who had long championed minority shareholder rights in Russia, was guilty of acquiring more shares of the state natural gas monopoly Gazprom than he was legally entitled to, and that Hermitage companies had engaged in tax evasion and other wrongdoing. It also appears to claim that the $230 million tax theft was the work of Browder – who had been exiled to London more than a year earlier – operating in league with Magnitsky.

"The case against Magnitsky and me was entirely trumped up," says Browder.

"The clear aim of Putin and his government is to say 'Magnitsky died of natural causes, he was not killed, and his arrest was lawful because he was a criminal'. In order to create the right formal backdrop for that narrative they have exonerated all 60 people who played a role in the Magnitsky case. The most recent was Kratov last week," he says.

"Now their next step is to prosecute and convict Magnitsky [and me].... This obviously won't play well in any forum where people have looked at the evidence, but Putin is more concerned about what they can put on state television to justify their actions before the less informed Russian audience," he adds.